Minnesota faces $1.1B shortfall - Bring Me The News

Minnesota faces $1.1B shortfall


Minnesota faces a $1.1 billion shortfall in the next two years, state officials announced Wednesday, the Forum reports. That figure is about what officials expected. The state press release is below.

Among the first to react were state labor leaders, calling for tax increases, the Pioneer Press reports.

More reactions and details were to come as Minnesota finance officials unveiled the widely anticipated budget forecast, a key baseline for Gov. Mark Dayton and state lawmakers who will create a budget for the next two years. It'll be the framework for Dayton as he cobbles together the proposal he must present to the Legislature by Jan. 22, the Associated Press notes.

Officials say that the forecast may be quickly outdated if President Barack Obama and Congress cannot come to an agreement to avoid a fiscal cliff Jan. 1, MPR reports. That's when automatic spending cuts and rising tax rates are triggered. That could hurt state budgets and potentially drop the nation into another recession.

Dayton and five other governors met in Washington with Obama on Tuesday to discuss the looming fiscal cliff and the effect it would have on states.

The state has more info on the Minnesota budget process.

And the short press release from the state:

St. Paul—Minnesota Management & Budget will release details later today about the latest state forecast which shows that the state faces a $1.1 billion dollar projected budget deficit for the 2014-15 biennium. Current conditions will allow the state to reduce the K-12 education shift by $1.3 billion of the $2.4 billion outstanding but that improvement does not continue into next budget period.

Commissioner Jim Schowalter, State Economist Tom Stinson, and State Budget Director Margaret Kelly will hold a press conference on the complete budget forecast at 11:45AM in room G-15 of the Capitol today.

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State tax revenue beats forecast, but $1 billion shortfall still looms

Revenue from Minnesota taxes came in more than two percent ahead of expectations in the fiscal year that ended June 30th. A top budget official says the extra $336 million is good news, but doesn't really clear up the clouds on the economic horizon. The state still faces a $1 billion shortfall in the two-year budget that starts next summer. And forecasters are getting less optimistic about the prospects for growth.